Banks in China convert 1 trillion yuan of debt to equity

China witnessed the biggest debt to equity swap effort in the country’s history, reported the official China News Agency, citing a government notice by the state planning department. Banks in China converted more than 1 trillion yuan (USD 149.2 billion or about Rs 95,330 crore) of debt into equity in over 70 state-owned companies. 
 
The effort was made to help the country’s most indebted borrowers, reported a leading news agency of China. This has helped the steel, coal, chemicals and equipment manufacturing industries to lower their aggregate debt ratio. China’s corporate debt increased to about 170% of the country’s GDP in 2016 from 100% in 2008. 
 
The aggregate debt held by China’s state-owned companies and private companies stood at USD 15.7 trillion in the previous year. The government is anxious to reduce the debt owned by the moribund state sector to shield the country’s financial system from the risks of defaults while the economy’s growth pace slows.